Скачать или смотреть Navigating the $600 Payment Threshold for Contractors

Handling contractor payments can be complex, especially when they involve multiple payment methods. Consider this scenario: you pay a contractor $400 by check and $300 via PayPal. Do you need to file a 1099? Yes, because the total exceeds $600. However, if you use a third-party app like PayPal or Venmo, the rules change. From 2024, payment processors issue form 1099-K for over $5,000 in business payments. Confused yet? Here’s the key:

1. Paid by check or direct transfer: File 1099-NEC.
2. Paid by credit card/PayPal goods & services: Payment processor files 1099-K.
3. Paid via PayPal friends & family/Venmo personal: You file 1099-NEC.

When uncertain, filing 1099-NEC is safer. Remember, the IRS penalizes omissions, not over-filings. Track payments all year, not just in December.

For more insights, visit https://bookkeepingcoach.net.